India Market Watch: Ease of Doing Business State Rankings in India and the Auto Components Market in Northeast India

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Andhra Pradesh, Telangana Jointly Top Rankings for Ease of Doing Business in India

Newly divided states Andhra Pradesh and Telangana jointly occupy the top spots in the Ease of Doing Business Reforms Ranking for 2015-2016 conducted by the government’s Department of Industrial Policy and Promotion (DIPP) and the World Bank. Last year’s top ranked state, Gujarat, came in third in the latest assessment. The DIPP-World Bank report assesses India’s states and union territories based on performance in various categories, which include single-window systems; tax reforms; construction permits; environment and labor reforms; inspection reforms; access to information and transparency; and commercial dispute resolution enablers. Information is gathered on a real-time basis, which is made visible on the Business Reform Action Plan portal run by the DIPP. This past year, 32 states and union territories submitted evidence showcasing 7,124 reforms. Interestingly, eight of the top 10 performing states are governed by the ruling party, Bharatiya Janata Party (BJP).

States across India performed much better this year than reflected in the overall national score in the World Bank’s 2017 Doing Business report. In fact, between July 2015 and June 2016, 16 Indian states implemented more than 75 percent of the 340 reforms proposed by the DIPP’s Business Reform Action Plan. The DIPP’s assessment process has encouraged a competitive federalism among states as they compete for higher ranks through faster implementation of pro-business norms. States with a laggard record include Kerala, Goa, and the northeastern states with a 0 to 40 percent reform implementation.

Foreign enterprises seeking to establish presence in India or looking to expand operations in the country can take advantage of the comprehensive breadth of the DIPP-World Bank’s report as it covers each part of the country and breaks down the reforms addressed. The World Bank Doing Business survey, on the other hand, only evaluates Delhi and Mumbai, both cities belonging to states that feature poorly in national rankings at 19th (Delhi) and 10th (Maharashtra), respectively.

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Untapped Automotive Components Market Potential in India’s Northeast Region

India’s Automotive Component Manufacturers Association (ACMA) will be holding an expo in Guwahati, Assam on November 26-27 in coordination with the government’s Department of Heavy Industries. The expo is touted to be the first-of-its-kind in the northeast region as domestic auto component manufacturers eye the untapped potential of its market valued at around US$ 300 million. In addition, future opportunities to supply to neighboring countries Myanmar, Bhutan, Nepal, and Bangladesh make investing in the region more attractive. The northeastern region refers to the eastern most part of India, comprising of seven contiguous states – Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, and Tripura as well as the Himalayan state of Sikkim.

Currently, the number of automobiles in the northeast amount to a million, half of which are two-wheelers. This is about two percent of the country’s total vehicle population. However, the commercial vehicle density in the northeast is higher with an average of 60 vehicles per 1,000 people as against the national average of 50 per 1,000. The northeastern states also experience high replacement demand due to the wear and tear caused by the hilly terrain, poor roads, and heavy rainfall. Considering that the region suffers from poor rail and air connectivity, roadways serve as the primary mode of public transit and cargo transport. All of this contributes to a high and sustainable market potential for auto component makers, particularly for components such as brake and clutch parts, pistons, valves, oil seals, tires, shock absorbers, wiper arm and blades.

Given the near ubiquitous presence of dubious middlemen and fake auto parts in the northeast states, domestic auto component manufacturers have a clear chance to exploit prospects by introducing reliable services and offering genuine parts. Since automobile markets in the north, west, and southern parts of India are already getting saturated, manufacturers and suppliers will do well to expand their market base.

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India’s Mobile Economy to See 1 Billion Unique Users by 2020

A new report by GSMA Intelligence called ‘The Mobile Economy: India 2016’ forecasts that India will see almost a billion unique mobile subscribers by 2020. Making this possible will be the rapid growth in mobile subscriptions, broadband, and internet connectivity across the country due to improving affordability of devices, massive capital expenditure by operators, and the government’s Digital India initiative.

The report expects an additional 330 million unique subscribers in India by 2020, boosting the mobile penetration rate to 68 percent of the population, up from 47 percent in 2015. With 616 million unique users at the end of June 2016, India continues to be the second-largest mobile market worldwide. In addition to increasing mobile penetration is the expanding coverage of 3G and 4G networks. According to the GSMA Intelligence report, those subscribing to 3G/4G mobile broadband connections could reach to around 670 million by 2020 or 48 percent of the total connection base. The number of 4G connections alone is expected to grow from just three million in 2015 to 280 million by 2020.

Key challenges, however, remain in capitalizing on India’s massive mobile market potential. Modernizing regulation and introducing transparency and long-term planning for spectrum allocation will be vital for accelerating mobile broadband access and adoption across the country, as stated by the Director General of GSMA, Mats Granryd.

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